Have you filed for bankruptcy? Do you know what life will be like after bankruptcy? Read on to find out about life after bankruptcy.
Do you know what Marvin Gaye, Kim Basinger, Elton John, and Larry King all have in common? They’ve all filed for bankruptcy. If you’re considering bankruptcy, you’re probably wondering what life after bankruptcy will look like.
It’s normal to be nervous about this huge financial decision. The good news is that a bankruptcy won’t last forever and with a little hard work, in time you can get your credit and finances back on track. Knowing what comes next may help you understand if bankruptcy is right for you.
You Filed for Bankruptcy, Now What Happens
If you’re wondering if bankruptcy is your best option, it’s important to consider what happens next. Anyone can find themselves in a situation where bankruptcy is the only way out. If you’ve had a medical emergency, lost a job, or lost a loved one, you know how much life can change in an instant.
Once you’ve filed, you’ll need to notify your creditors. You want to start here so that you can work on the next steps. Any non-exempt liquid assets are used to help pay your creditors. We’ll help you sort out this process and determine which assets are protected and which can be used to pay down your debts.
As credit cards are closed or paid off and other bills are settled, you’ll slowly start to feel a weight lifted off your shoulders. You’ll also see your credit score start to creep back up.
To help you keep your home and qualify for future credit, there are a few key things you can do after bankruptcy to stay afloat. Maintaining a job, making your payments on time, and working on your credit are all key.
The Importance of Maintaining a Home and Employment
During a bankruptcy, you aren’t always forced to give up your home. If our bankruptcy lawyers are able to help you stay in your home, it’s crucial to keep up with your payments after a bankruptcy. If you need to move and buy another home, getting a mortgage will be trickier with a bankruptcy on your file.
To help make sure you can keep up with your home payments, consider creating a budget. Make a list of every expense you have going out and all the income you have coming in. Make paying your mortgage a priority.
If you need to cut expenses to keep up with your mortgage payment, do so. Keeping up with your mortgage payment is also a great way to improve your credit. Unlike credit cards, your mortgage is considered a good debt to have. Keeping up with it will help keep your credit score up.
It’s also critical that you stay employed. A steady income puts you in a stronger position financially. You want to make sure you have the income you need to stay afloat.
Pay Your Bills on Time
Paying your bills on time is one of the easiest ways to repair your credit and rebuild your finances after bankruptcy. Consistent payments show future lenders, landlords, and even employers that you’re trustworthy when it comes to money.
To make sure you pay your bills on time each month, make payments automatic. Most banks have an auto-payment feature where you’re able to pay your bills automatically each month. This auto-pay feature makes it easy to pay your bills without any work on your end.
Sticking to your budget will also help make bill paying easier. The more room you have in your budget, the more comfortable you’ll feel making your payments on time each month.
Pay your bills on time and you’ll start to see your credit score improve. Not only will your score go up but so will your ability to obtain additional credit, new places to live, and new jobs in the future.
Repairing Your Credit
Your credit score affects everything, from your ability to get a mortgage to getting a new job. Potential employers may run your credit. If they see a bankruptcy along with a low score, that could spell trouble.
A bankruptcy that’s a few years old, coupled with a higher credit score, will indicate you’re on the right path. A Chapter 13 bankruptcy will remain on your credit history for seven years. This is because some of your debts are paid off. A Chapter 11 bankruptcy won’t fall off your credit for 10 years.
The good news is that eventually, a bankruptcy will disappear from your credit report. In the meantime, focus on other ways you can improve your credit. In addition to making your payments on time, you will want to keep your amount of debt low.
Don’t overuse your credit cards and don’t leave large balances each month. Though it’s tempting to apply for credit cards designed for people with bankruptcy on their file, opening too many new lines of credit will lower your score.
Seek Mortgage or Loan Help or Alternative Financing
If you need a mortgage or loan after you’ve filed for bankruptcy, traditional financing may be almost impossible. Lenders want to make sure enough time has passed between your bankruptcy and when you’re applying for a new loan.
While you may find traditional financing difficult, alternative financing may be an option. To start, you can consider using a co-signer. For example, if your bankruptcy occurred before you got married, your spouse may be able to get a mortgage on their own.
You can also ask family members to co-sign for new loans or mortgages if needed. This could help you get student loans for kids down the road or a new mortgage or apartment in the future.
There are also online banks or alternative lenders out there who specialize in lending to people with prior bankruptcies or less-than-perfect credit. These lenders may have less strict criteria.
Life After Bankruptcy – Starting Over is Possible
Life after bankruptcy isn’t all doom and gloom. With some hard work and a bit of time, you’ll be able to repair your credit and get back on your feet.
If you’re interested in learning more about bankruptcy, contact Husker Law in Omaha at 402-415-2525. You’ll be connected with a bankruptcy professional who can see if it’s the right option for you.
